Rotala Plc (R on the application of) v Greater Manchester Combined Authority

The statutory audit requirement for a bus franchising scheme applies to the authority’s statutory assessment and operates before public consultation. It does not create a continuing duty to audit later information or unforeseen changes, including a pandemic. Words should be read into a statute only where the clear-drafting-error criteria are satisfied. Where no fresh audit is required, rationality does not make one mandatory. A reasonable authority may choose how to test whether earlier conclusions remain reliable. Independent assurance of a sensitivity analysis may provide a rational basis for proceeding. Later information may nevertheless make proceeding irrational if it is not considered.

Rotala challenged the decision of the Greater Manchester Combined Authority and the Mayor to make the Greater Manchester Franchising Scheme for Buses 2021. The decision followed an initial statutory assessment, independent audit and consultation under the Transport Act 2000, together with a COVID-19 impact report, an independent assessment review and a second consultation.

The Administrative Court dismissed Rotala’s claim: [2022] EWHC 506 (Admin). On appeal, Rotala argued that a further statutory audit was required after the pandemic-related material became available, or alternatively that it was irrational to proceed without one.

Appeal dismissed. Lady Justice Andrews gave the leading judgment. Lord Justice William Davis and Lord Justice Snowden agreed.

1. Scope and purpose of the audit. The audit required by section 123D of the Transport Act 2000 is an audit of the section 123B assessment. It is obtained after the assessment and before public consultation. Its purpose is to provide independent quality assurance concerning the information and methodology used, and to identify problems for the authority. The auditor’s statutory role is fulfilled when that report has been prepared and supplied at the prescribed stage.
2. No implied continuing audit duty. The statute contains no express requirement for a fresh assessment or audit when later information, consultation responses or changed circumstances affect the original analysis. The timing, purpose and prescribed use of the audit, together with the silence of the statutory guidance on any continuing auditor role, strongly opposed the proposed implication.
3. Reading words into the statute. Applying the criteria in Inco Europe and others v First Choice Distribution and others [2000] 1 WLR 586, the court was not abundantly sure that there had been a drafting error, or of the substance of the provision Parliament would have made. The COVID Impact Report was not a section 123B assessment and could not generate a section 123D audit obligation.
4. Negative audits and later information. A critical audit report is not an automatic statutory bar to proceeding. Whether a reasonable authority should address the auditor’s concerns is a matter of fact and degree. Conversely, later information may make it irrational in the Wednesbury sense to proceed without considering it and, if necessary, revisiting the assessment. Parliament had not prescribed a single response.
5. Rationality. Once no fresh audit was legally required, it was not irrational to choose an alternative method of evaluating the effect of the pandemic. A further audit was one rational option, but not the only one. The Grant Thornton Assessment Review provided independent assurance that TfGM’s method of stress-testing the original conclusions was appropriate. The appeal therefore failed on both grounds.

• Court of Appeal (Civil Division). Rotala’s appeal was dismissed, upholding the decision below.
• High Court of Justice, Queen’s Bench Division, Administrative Court. Julian Knowles J dismissed the judicial review claims concerning the franchising scheme: [2022] EWHC 506 (Admin).